Complexities in the air-conditioned logistics chain - Part 2: Storage

In my last post, I started the discussion about the complexities of the acclimatized chain (cold chains), emphasizing those experienced by the transport operation. The idea now is to detail the challenges faced by storage when dealing with air-conditioned items, in addition to addressing other influences of these products along the logistics chain.

Some challenges are similar to those I brought in the transport text, as you will see along the list below.

1. About the cost: the cost of storage for climate-controlled items tends to be higher than dry operation. Refrigerators, condensers, evaporators, temperature-sealed doors, insulated walls, and even refrigerated docks add to the CapEx required for installation. In addition, cooling has an impact on operating costs, especially energy consumption.
2. About hiring: the investment required for the storage of air-conditioned items is one of the incentives for outsourcing this operation. However, for reasons similar to transport, such as high cost, loss of productivity, specificity of temperature ranges and high need for control, logistical service providers of climate-controlled storage exist in a smaller proportion when compared to the supply of warehouses at room temperature, making outsourced contracting more complex. Highly relevant variables are impacted by this fact, such as: cost per pallet position, level of service available, distance from factories to warehouses and availability, especially at peak times.
3. About temperature control: Due to the various temperature ranges that items in a climate-controlled operation can have, it is common for a warehouse to be divided into several chambers, reducing warehouse capacity and handling productivity. Temperature control requires sensors and rigid controls, making operation complex. This situation can be even more critical when it is necessary to control the humidity in the chambers.
4. About the different installations along the chain: Analogously to what happens in transport, the climate-controlled chain needs refrigeration in all the links of its chain. This includes the factory warehouse, distribution centers, cargo transshipment points, among others. Generally, for locations with very small operations, where the load is only broken into smaller vehicles, climate-controlled options are even scarcer. Because of this, air-conditioned meshes are often leaner, with fewer installations and possibly less optimized.
5. About the points of sale: if the operation of climate-controlled storage in facilities of the logistics network itself, such as DCs and TPs, is already complex, what will it say in third-party points of sale for B2C marketing, which include supermarkets, convenience stores, newsstands, restaurants, flower shops, among others . The time that the product in the conditioned chain is at the point of sale is no exception to the need for refrigeration. The ideal, to maintain the quality of the items, is that they are kept at the indicated temperature until the moment of consumption. However, we know that control at the POS is very difficult, mainly due to spraying. Chocolates, like flowers, are sold in a huge number of establishments, many of them with their doors open to the customer and without adequate refrigeration, and inspecting the conditioning temperature in all of them is practically an impossible mission. What we have seen is that not even large retail chains are able to adapt to the needs of all items, as there is a wide range of desired temperature ranges and high costs related to refrigeration. To reduce the impacts of this on product quality, manufacturers need to adapt their production processes, packaging used, sizing of stock at the POS, estimated shelf life, among other aspects of the chain.

I think it is also worth commenting on other complexities that exist in the cold chains not directly addressed during the transport and storage analysis.

1. On chain pressure: I talked about the pressure in the operation to reduce costs during transport, but there is also the lead time pressure: as I mentioned, air-conditioned items, in general, have a shorter shelf life and, therefore, the longer the deadline to expire when they arrive at shelves, the more likely it is for sale. In this way, all stages of the chain need to be very well orchestrated, from the moment of decision for manufacturing, through the allocation of the order, to delivery. The smaller the number and duration of steps and their 'waits', the better the lead time of product.
2. about planning: Much has been said about the difficulty of outsourcing transport and warehousing operations. To reduce this complexity, an important ally is needed: planning. Done with sufficient accuracy and anticipation for a response from the procurement, the smaller the impact on the operation, both in terms of cost and availability.
3. About technology: We've already talked a little about temperature monitoring and tracking along the supply chain, but I haven't talked directly about technology. A cold chain, mainly for food, has several standards to be followed in all stages of transport and storage. It is necessary to use systems (software and/or hardware) that respond to this complexity, with features such as:

• • Long-term data storage capability for future government inspections and quality control;
  • report on real-time to the quality team about storage conditions in transport and on land;
  • Alerts in case of deviations from the ideal temperature range;
  • High ability to respond to changes in the external environment, maintaining internal temperature and humidity (in the vehicle or shed);
  • In the case of the fleet, ability to remotely control the temperature at a distance, that is, to allow the change directly from the company's base;
  • Intelligence to maintain the ideal temperature with the lowest possible energy expenditure, collaborating in terms of sustainability.

Exposing this long list of points about storage and general aspects, I conclude the analysis of the acclimatized chain. There is no lack of challenges for shippers and logistics operators in the segments involved. Several areas were mentioned in addition to the logistics itself, such as: planning, selection of suppliers, quality and customer service. Great alignment between all parties is necessary so that the products reach the end customer with the expected quality, always seeking the lowest costs and the greatest consumer satisfaction!

References:

– Sumit Varma – LinkedIn Pulse (13/07/2022): Cold Chain Logistics Complexities and Possible Solutions

– Food Logistics (13/07/2018): Mastering the Complexities of the Cold Chain

– Logistics Brew: What is Cold Storage & How Does Cold Storage Work?

– Jetcar: Transport à chaud, deliver rapide

– Cargo Connect (17/02/2020): Managing complexity within the Food Supply Chain

– Totvs (14/10/2021): Cold Chain: understand what it represents for the logistics sector

– Food Logistics (14/08/2015): Temperature Control: The Ongoing Quest In The Food Supply Chain